As you know, the proposed rules would raise the minimum salary level for exempt employees from its current $455 per week ($23,660 per year) to perhaps as much as $970 per week ($50,440 per year). (Our discussion of the proposed rules can be found in the link above).

According to an article in Bloomberg BNA, some members of Congress wonder how their budgets can accommodate such a dramatic rise in salaries. Congressional staffs are often made up of young, exempt, professionals who are paid less than the proposed $50,440 threshold and often work in excess of 40 hours per week. Many House Democrats who favor the expansion of overtime protections to employees in the private sector are concerned they won’t have enough money to maintain their current staffing levels.

Once the rules are finalized, all New York employers will be scrambling to adjust their budgets to reflect the new reality. Unfortunately, unlike Congress, private employers cannot just “appropriate” more money for themselves. Important decisions will need to be made regarding staffing levels and pay practices.

For questions on how these new rules may affect you, please contact Frank Kerbein, Director, Center for Human Resources at frank.kerbein@bcnys.org or at (800) 332-2117.

According to the report: “New York’s small businesses generated $954 billion in receipts in 2012, the latest figures available, accounting for approximately 43 percent of all business receipts in New York, according to DiNapoli’s report.

Among the more than 455,000 businesses in New York, more than 451,000 are small businesses. Almost two-thirds of small businesses have fewer than five employees. More than 80 percent have fewer than ten employees.

Firms with 20 to 99 employees comprised approximately one-third of the total small business employment with over 1.2 million employees. The larger firms (those with 100 to 499 employees) had the highest average payroll per employee, nearly $56,000 per year.”

This report should serve as a stark reminder to lawmakers of the myriad of benefits small businesses bring to their communities as they contemplate a 67 percent increase in the state’s minimum wage.

That wage increase would cost anywhere from 200k to 600k and further erode the job prospects and opportunities for growth among our state’s poorest citizens.

Please visit www.minimumwagerealitycheck.org to learn more about this misguided proposal and to join our growing coalition against the $15 an hour minimum wage.

The U.S. Chamber of Commerce, of which The Business Council of New York State is a member, filed a lawsuit in U.S District Court for the Western District of Washington earlier this week to “challenge a Seattle ordinance that authorizes union organizing of for-hire drivers working as independent contractors, highlighting that the ordinance will burden innovation, increase prices, and reduce quality and services for consumers.”

According to Amanda Eversole, president of the Chamber’s Center for Advanced Technology & Innovation, “this ordinance threatens the ability not just of Seattle, but of every community across the country, to grow with and benefit from our evolving economy. Technology companies are leading the charge when it comes to empowering people with the flexibility and choice that comes with being your own boss, and that is something to be championed, not stifled.”

Now, this of interest to us here in New York for two reasons: first, Uber and Lyft are currently operating as for-hire vehicle service companies in New York City and second, they are actively trying to expand to the rest of New York State. Whatever happens with this suit would set a precedent that could then be applied here. The Business Council has been vocal in its support of for-hire vehicle companies like Uber and Lyft. We believe they would be an economic development tool for many upstate communities that lack reasonable and robust public transportation options.

From The Buffalo News: “Betty’s is a long-established neighborhood favorite on Virginia Street in Buffalo. In anticipation of the new wage law, it has increased prices by between 50 cents and $1.50 per item, and will probably do it again in a few months. The strategy is to soften the blow with two smaller, separate increases, said Carole Simon, a Betty’s co-owner.

The price increase would have been steeper, but the restaurant tried to avoid that by cutting costs elsewhere. It has altered its hours to cut down on payroll costs, opening a half-hour later and closing a half-hour earlier. It has removed two popular but time-consuming dishes from the menu – the jibarito plantain sandwich and the spinach potato pancakes. And it has pared dishes down to their basic elements, listing them with upcharges for extras. That way, customers have the option of ordering the basic eggs, home fries and toast for $5.50, or they can upgrade to vegan sausage and gluten-free bread if they’re willing to pay more.”

Remember this when advocates for a $15 an hour minimum wage for all workers say The Business Council and other business groups are wrong when we predict wage increases will negatively impact the economy and cost jobs.

Perhaps you saw the piece that ran in the Buffalo News over the weekend called “Raising the minimum wage is good economics” co-authored by an economics professor at SUNY Buffalo. Well, hopefully you don’t know anyone who is taking that professor’s class, because his reasoning is way off base.

Our Vice-President Ken Pokalsky decided to give a few of the more outlandish claims in the piece the Minimum Wage Reality Check treatment:

“In Seattle, the first city to adopt a $15 minimum wage, unemployment just hit an eight-year low of 3.6 percent.”

Reality Check: Seattle is not at a $15 an hour wage today, the city’s phased-in wage is currently at $11 an hour. Moreover, Seattle wages could be depressing jobs in low wage sectors, while others continue to grow. We need to wait and see. But job counts and unemployment rates with an $11 an hour wage isn’t evidence of what job counts and unemployment rates will be under a $15 an hour wage.

“In fact, Nobel Prize-winning economist Paul Krugman has said,”

Reality Check: The rest of the sentence doesn’t matter. Paul Krugman is a left of center political commentator now, regardless of his prior work. What he says is hardly evidence of anything, other than his blatant bias.

“The City of Buffalo defines a living wage as enough to keep a family of three out of poverty; in 2016 the rate will be $13.06 per hour.”

Reality Check: So what, this applies only to vendors who VOLUNTARILY choose to do business with the city, and only applies to contracts > $50,000.

“Inflation in this country over the last century has averaged over 3 percent.”

Reality Check: Again, what is the point? Over the last 10 years inflation has averaged a smidge over 2 percent. The last 5 years it’s been under 2 percent. So why use a figure 50% higher than recent trends? Unless of course you’re simply trying to deliberately mislead.

You know you’ve hit a nerve when the opposition resorts to misleading arguments.

Today’s Newsday features an article where the Long Island Labor Federation dismisses a new report by the Long Island Association projecting significant job losses resulting from a $15 an hour minimum wage. The Newsday story is here. (it is behind a paywall, sorry)

According to the Federation, the LIA’s report projecting job losses of up to 23,000 is “disproved” by “numerous” studies, and cites a letter from “600 economists” to President Obama arguing that a minimum wage increase won’t hurt jobs. The Long Island Federation of Labor is being completely disingenuous. Five seconds of searching on the web finds the letter being referred to here. While the federation is right, “600 economists” do support an increase in the federal minimum wage, the proposed increase is from $7.25 to $10.10 an hour. That’s nowhere near $15 an hour, the target wage that was the focus of the LIA’s analysis and a recent Empire Center report. In fact, New York’s minimum wage is already set to go to $9 at the end of the year, a level close to the 600 economists’ target level. At $9, New York’s minimum wage will be one of the highest in the U.S.

We are unaware of “numerous” other studies that “disprove” the projections from the Empire Center and the Long Island Association on a $15/hour minimum wage. Most studies we have seen look at far lower target levels. For example, a CBO study issued in 2014 suggested that a $10.10/hr. minimum wage would reduce national employment by 500,000. That same study conceded that the actual job impact could be “very slight” or climb as high as 1 million. New York is talking about going well beyond $10.10 an hour and the only credible studies to date indicate significant job loss.

Syracuse Mayor Stephanie Miner made news, and received plaudits from liberal activists like The Working Families Party, earlier this week when she announced she was increasing the minimum wage for all city employees to $15 an hour.

Miner estimates the move will affect 61 of the city’s 1700 employees and cost roughly $220,000 per year. It’s not an eye-popping number, and probably speaks more to the overall high wages of city of Syracuse employees than anything else, but it’s also not chump change. The increase is sure to have an impact, and becomes increasingly questionable when put into context with Miner’s own comments when she submitted her budget last April. From the Syracuse Post Standard (emphasis added):

“Her 2015-16 budget anticipates a $9.2 million deficit, which will have to be paid for out of cash reserves unless city officials can cut costs during the year. That’s the smallest deficit since Miner took office in 2010, but a sign that Syracuse continues to face a fiscal crisis, Miner said Tuesday.”

So, in April Mayor Miner was proposing a budget with a $9.2 million deficit that would be paid either out of a so-called “rainy day fund”, or by cutting costs. Now, just six months later, not only is Mayor Miner not cutting costs, she’s increasing them.

Rainy day funds are supposed to be used, like the name suggests, during dire financial times. Dipping into them to give artificially-inflated wage increases to dozens of city workers seems at best, misguided.

We can’t help but wonder how the people of Syracuse will feel when Miner’s next budget calls for tax increases in order to cover these increased costs.

Most pollsters will tell you, how you ask the question can impact the answer. What they don’t always mention is the result can often significantly alter the public narrative on an issue.

Last week’s Quinnipiac University poll is a perfect example. Their press release claimed “New York poll found voters back $15 minimum wage,” and in their first poll question, “Would you support or oppose raising the state’s minimum wage to $15.00 an hour over the next several years?” participants agreed, 62 to 35%. The headline in a number of media outlets was, Q poll shows support for Governor’s $15 minimum wage proposal.

But that poll had a second minimum wage question, and the response has been largely ignored by the media.

It asked: Which of four options “…comes closest to your point of view regarding raising the state’s minimum wage,”?

No increase

an increase but less than $15

an increase to $15

or an increase above $15

For this question, 49% preferred something less than $15, slightly more than the 48% who preferred $15 or higher. Interestingly, for upstate respondents, 61% supported an increase under $15, including 13% who chose no increase. When given a range of choices, the Q-poll found that New Yorkers in fact are split on the $15 per hour proposal.

Then there is this opinion piece in yesterday’s NY Post. Michael Saltsman, from the Employment Policy Institute, used Google’s Consumer Survey tool to survey 504 New Yorkers. He first asked about a $15 per hour minimum wage, and – similar to Quinnipiac – found a support rate of 57%. But when they asked whether New Yorker’s would support that policy if it would cause some less-skilled employees to lose their jobs, the results flipped to 57% in opposition. When asked how they’d feel about a $15 minimum wage if it would cause some small businesses to close, 67% opposed it.

No doubt, there will be numerous studies on the economic impact of a $15 minimum wage. Three west coast cities– Seattle, San Francisco and Los Angeles – have adopted laws moving toward that figure, and some data are already showing job loss. Stay tuned.

The Manhattan Institute, a highly-regarded, nonpartisan, independent research and educational organization is out with a new issue brief examining the economic impact of raising the federal minimum wage to $15 an hour.

This is an issue close to the mind of many New Yorkers after the recent decision by the state Labor Department to recommend raising wages for fast-food workers to $15 an hour by 2018 in New York City and 2021 in the rest of the state.

According to the executive summary, The Manhattan Institute concludes:

“We find that increasing the federal minimum wage to $15 per hour by 2020 would affect 55.1 million workers and cost 6.6 million jobs. Aggregate income among low-wage workers would rise by $105.4 billion, after accounting for income declines from job losses. However, only 6.7 percent of the increase in income would go to workers who are actually in poverty.

Because the exact effect of the minimum wage on employment remains unsettled, we check the robustness of our results by employing a range of estimates from the literature that imply modest, moderate, and severe employment consequences. In each case, we analyze how the change in earnings resulting from a minimum-wage increase would be distributed across income levels.”

We find it particularly interesting that the brief finds less than 7 percent of the projected increase in worker income would go to people living in poverty. Especially since advocates often cite lifting workers out of poverty as the primary reason drastic wage hikes are necessary.

Business Council president and CEO Heather C. Briccetti, Esq. was a recent guest on the Time Warner Cable News interview program Capital Tonight. Host Liz Benjamin’s questions covered a range of issues starting with the Governor’s budget.

Ms. Benjamin: “The Governor’s budget did seem to be a bit of a mixed bag for business. You have a wide range of members, what do they think of the proposals.”

“This budget represents another year of fiscal responsibility and to The Business Council that’s a huge positive”

Ms. Briccetti: “There are a lot of positives and I always go back to controlling spending. I was just recently at a meeting of the heads of many of the state chambers of commerce from across the nation and in many cases they are dealing deficits in their states and going into a budget cycle looking at what are the least damaging taxes their states could raise. And we’re not in that position. To me that’s a testament to four consecutive years of spending control. Yes, some of the surplus that the state has is the result of settlements, but some of it the result of fiscal responsibility. This budget represents another year of fiscal responsibility and to The Business Council that’s a huge positive because it alleviates the need to go looking for new revenue when business in the state is still trying to dig out of the recession.

“The bottom line is raising the minimum wage does not create jobs.”

On the Governor’s proposal to increase the minimum wage:
“The bottom line is raising the minimum wage does not create jobs. It is a disincentive to job creation. If you just look at U.S. Census data for 2013, which is the last year that is available, 60 percent of people who live in poverty don’t have a job. This [raising minimum wage] doesn’t do anything to assist them. In fact, it is counter-productive because it creates pressure on small business to eliminate jobs, because they can’t afford the increased cost of the new minimum wage. So I would argue, let the economy recover. Let the pressure to fill positions drive up wages, which is happening in other states. There are states that have a higher average weekly wage, but don’t have a higher minimum wage—they have the same minimum wage as the Federal government and wages are going up because they have full employment. The problem is that raising the minimum wage has been identified by supporters as a way to eliminate poverty and it is not. The way to end poverty is to create more jobs.”

“I think you have to look at the core issue of job creation.”

On competition-based upstate economic development:
“We support good projects, so I don’t think the alternative of saying ‘we’re just going to each region a fixed amount’ regardless of what kinds of projects they have in the works is a reasonable way to allocate economic development dollars. I think you have to look at economic development projects on kind of an individualized basis. Competition could exclude good projects because overall that region’s plan isn’t as good as the one next to it would be unfortunate and we’d hate to see that happen.

I think some evaluation of the individual projects rather than the overall package that the region puts up would be good because sometimes they be tempted to add frills to make the package look shinier. And that is maybe unnecessary spending. I think you have to look at the core issue of job creation.”

If the problem is property taxes, then creating subsidies for select groups is not the answer because it doesn’t drive down taxes.”

On the Governor’s proposed property tax plan:
“If the problem is real property taxes and we would agree that it is. It’s the largest tax that most small businesses pay and businesses are the largest property taxpayers in the state. If the problem is property taxes, then creating subsidies for select groups is not the answer because it doesn’t drive down taxes. I think we need to take another hard look at mandate relief [for local government]. The property tax cap will take time but is a good and very effective tool in controlling the growth of property taxes. I agree with the Governor overall in his mission of consolidating layers of local government to start peeling away some of the unnecessary spending that drives up real property taxes, but there’s also a need for mandate relief. Let’s do scaffold law reform that is a substantial burden on everyone, every homeowner, every business, and every municipality.”

You can watch the entire interview here. Please note, a Time Warner Cable subscriber login is required.